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Buffett Buys a Further 75 Million Apple Shares, Sells Out of IBM

(Bloomberg) -- Berkshire Hathaway Inc. bought an additional 75 million shares of Apple Inc. in the first quarter, while dumping its remaining stake in International Business Machines Corp., Chairman Warren Buffett said in a CNBC interview.

The Apple purchase, which would have cost between $11 billion and $14 billion, adds to the almost 170 million shares that Berkshire Hathaway owned at the end of 2017, when it was already Buffett’s biggest shareholding. The added stake would see Berkshire overtake State Street Corp. to become Apple’s third-largest investor, according to data compiled by Bloomberg. The move is paying off so far, with Apple shares climbing to a record. The stock was up 3.3 percent as of 11:19 a.m. in New York.

Buffett’s announcement comes just days after Apple reported quarterly sales and profit that topped analysts’ estimates on surging services as revenue rose at the fastest pace in more than two years. The results helped end a recent swoon in Apple shares amid concern its flagship iPhone X model was struggling to win consumers.

“It is an unbelievable company,” Buffett said in the interview. “The idea of spending loads of time trying to guess how many iPhone Xs or whatever it may be are going to be sold in a given three-month period of time, to me it totally misses the point.”

Buffett said he was “almost certain” that Berkshire owns zero shares in IBM after sales in the first quarter. The company held about 2 million shares of the technology firm at the end of 2017. Buffett has sold down his stake over the past year after saying his thesis was flawed when he plowed more than $10 billion into IBM in 2011.

Berkshire Hathaway is holding its annual meeting this weekend in Omaha, Nebraska. Buffett said the company’s exact holdings will be disclosed in a quarterly regulatory filing Saturday.

While Cupertino, California-based Apple still gets more than 60 percent of its revenue from iPhones, services are playing an increasingly important role as growth in the overall smartphone market slows.

Chief Executive Officer Tim Cook sells a growing array of services through a base of more than 1.3 billion Apple devices, including music, cloud storage, movies and apps. Revenue from services surged 31 percent to a record $9.2 billion in the most recent quarter.

An Apple Music subscription costs $10 per month (unless it’s on a family plan), and the number of paying users recently hit 40 million. The middle tier for iCloud storage costs $2.99 a month. The company now has 270 million paid subscribers across applications and its own services, up by 100 million from the same period a year ago.